French Relish Cycle of Scandals Featuring Sarkozy-Era Officials

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PARIS -- The French love their political scandals, especially when there is a change of power at the presidential palace, the Élysée. Knives come out, grudges get pursued and those whose power was so intimidating a few short months ago face investigations.

Those inquiries, which prompt sometimes delicious and humiliating leaks, very often go nowhere, lost in a thicket of appeals and denials, with not quite enough evidence to indict the key figures involved.

France is in the midst of another cycle of scandals, most of them concerning central figures in the presidency of Nicolas Sarkozy, who lost his bid for re-election a year ago to the Socialist candidate, François Hollande. Nearly every week there are new revelations about Mr. Sarkozy or his former top lieutenants, including his good friend, consigliere, former chief of staff and former interior minister, Claude Guéant, and now even Christine Lagarde, the former finance minister.

The Lagarde case, which involves a dispute over the sale of a company, is particularly interesting for the rest of the world, since she is the well-liked managing director of the International Monetary Fund. She was chosen two years ago to replace the scandal-prone Dominique Strauss-Kahn, another former French finance minister. The case is particularly interesting for the French, too. Although Ms. Lagarde served Mr. Sarkozy, both her top aide then, Stéphane Richard, now head of France Télécom (soon to be renamed Orange), and the larger-than-life character at the center of the case, Bernard Tapie, were Socialists.

While a clear indication of the intimacy among France's elite, no matter their political allegiance, the Lagarde case has put the Hollande government in a quandary. While Mr. Tapie's critics dismiss him as an avaricious renegade, Ms. Lagarde has kept a vital international job in French hands and Mr. Richard is supported by both his board and by the government, which owns a significant stake in the company.

Mr. Tapie came from a modest background to become an actor, television star, racecar driver, politician, government minister, businessman and owner of one of France's great soccer teams, Olympique de Marseille, which got him a jail term when he was found guilty of bribing opposing players. He also owned Adidas.

But in 1992, while in government, he asked the bank Crédit Lyonnais to sell Adidas, which it did for his minimum price, while concealing that it sold the company to itself. It then resold Adidas, making a profit of more than $500 million. Mr. Tapie later sued the bank, and when Mr. Sarkozy became president, Ms. Lagarde agreed to a three-judge arbitration panel to settle the long case. In July 2008 the panel awarded Mr. Tapie $528 million.

The accusation is that Mr. Sarkozy and his aides arranged the outcome, in part through the chairman of the panel, Pierre Estoup, now 86, as part of a deal with Mr. Tapie. What Mr. Tapie provided to Mr. Sarkozy in this version is not clear, but Ms. Lagarde and Mr. Richard have been interrogated in the case, and there are suggestions that Mr. Guéant was involved; he is expected to be questioned soon.

Ms. Lagarde has said that she did nothing wrong, and in testimony leaked to Le Monde suggested that Mr. Richard handled the matter and kept information from her. She is judged so far to be just a witness in the case, not a suspect, unlike Mr. Richard -- who also denies wrongdoing.

But Le Monde recently published a handwritten letter from Ms. Lagarde addressed to Mr. Sarkozy, undated and possibly unsent, seized by the police when they raided her home in March over the Tapie case. The letter, leaked to embarrass Ms. Lagarde, in five points promises loyalty to Mr. Sarkozy, vows that she will do whatever he thinks needs to be done for as long as he wants to employ her, and asks for his advice, support and counsel. Written in the familiar "tu" form, it is signed, "with my immense admiration, Christine L."

If nothing else, the letter is an indication of the sycophancy surrounding the republican imperium of the French presidency, especially under Mr. Sarkozy.

Mr. Guéant, who was widely feared as Mr. Sarkozy's enforcer, is also being investigated over receipt of a $650,000 wire from a foreign bank. He says the money was for the sale of two paintings that experts say would not be worth nearly that much, and which he did not register.

He is also being investigated over the receipt of $13,000 a month in cash from 2002 to 2004, when he worked for Mr. Sarkozy, then the interior minister. Mr. Guéant says the money, drawn from police accounts and intended for informers, was to award the police, not himself, but such payments were supposed to have been outlawed in 2002. These inquiries stemmed from police raids on his home and offices.

The other scandals around Mr. Sarkozy -- who has immunity for any official acts while he was president -- remain significant, especially what has been called the Bettencourt affair. This concerns whether Mr. Sarkozy and his aides received illegal campaign financing for his 2007 campaign by taking advantage of Liliane Bettencourt, the richest woman in France.

Last week, Bernard Squarcini, his former chief of domestic intelligence, was indicted by a court on charges of illegally obtaining the phone records of a journalist who had received leaks about the case from the Justice Ministry. Mr. Squarcini argues that he was after the leaker and was defending the national interest. A simultaneous lawsuit claiming political bias on the part of the investigating magistrates in the case is also proceeding.

There is also the long-running scandal around Mr. Sarkozy; a Sarkozy friend, aide and former minister, Brice Hortefeux; and Col. Muammar el-Qaddafi of Libya. Qaddafi loyalists and one of his sons say they gave between $26 million and $65 million to Mr. Sarkozy's team as campaign contributions. They said the money was funneled through the businessman Ziad Takieddine, who has made similar claims and is under investigation himself over earlier arms sales to Pakistan.

Mr. Sarkozy visited Libya in 2005 and Mr. Hortefeux in 2007, and as president, Mr. Sarkozy greeted Colonel Qaddafi in Paris for a lavish state visit in December 2007. Mr. Sarkozy, Mr. Hortefeux and Mr. Guéant deny wrongdoing, and say that the Libyans are seeking revenge because Mr. Sarkozy led an international effort to overthrow the Libyan leader.

And there is the continuing case of illegal kickbacks for personal and political gain from the sale of submarines to Pakistan in 1994, involving Mr. Takieddine, when Mr. Sarkozy served as budget minister for a former prime minister, Édouard Balladur.

In all this there is also a longstanding debate about investigative magistrates themselves, a function of the Napoleonic system, who act independently of the police, the prosecutor and the defendant, as a combination of investigator and grand jury. They have great power, and one of Mr. Sarkozy's problems has been that he advocated getting rid of them altogether and moving toward a more Anglo-Saxon style of adversarial justice. These days, with the French government trying to protect itself from what it considers Anglo-Saxon neo-liberalism and "French bashing," anything that smacks of the Anglo-Saxon system of governance is considered suspect.

Mr. Hollande is not untouched, either. Investigations continue around the illegal foreign bank accounts held by Jérôme Cahuzac, the budget minister who had to resign in disgrace after admitting he lied about the accounts to everyone, including Mr. Hollande, Finance Minister Pierre Moscovici and Parliament.

But Mr. Moscovici faces accusations, both from the right and also from some of his enemies within the Socialist Party, that he should have done more to uncover Mr. Cahuzac's illegal accounts. Mr. Moscovici calls the accusations unjust, but the sword hangs over his head as he continues the difficult and unpopular task of cutting state spending.

Even Mr. Strauss-Kahn, who reached a private settlement in a sexual assault case, is not in the clear yet. Prosecutors have said that he has no case to answer in a Lille prostitution ring, because he said that he had no idea that the women involved were prostitutes and he did not pay them himself. But the investigating magistrates in the case may yet decide to go to trial.